CAFR - sdcera

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F I N A N C I A L / M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S TABLE 4: CHANGES IN PLAN NET ASSETS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 AND 2005 (DOLLARS IN THOUSANDS) Increase/ Percentage 06/30/2006 06/30/2005 (Decrease) Change Additions Employer Contributions $ 302,460 316,074 (13,614) (4.3%) Member Contributions 41,911 40,766 1,145 2.8% Net Investment Income 960,008 793,459 166,549 21.0% Net Securities Lending Income 2,197 1,300 897 69.0% Total Additions 1,306,576 1,151,599 154,977 13.5% Deductions Retirement Benefits 290,197 259,521 30,676 11.8% Health Benefits 32,879 32,568 311 1.0% Refund of Contributions 2,991 2,185 806 36.9% Administrative Expenses 8,034 7,491 543 7.2% Total Deductions 9.0 334,101 301,765 32,336 10.7% Decrease in Net Assets Held in 8.0 Trust for Pension Benefits 7.0 $ 972,475 849,834 25.00% 122,641 14.4% 6.0 20.00% 5.0 15.00% 4.0 10.00% ADDITIONS TO RETIREMENT 3.0 PLAN NET ASSETS 5.00% The primary sources financing 2.0 the benefits SDCERA provides to its members 0.00% are through 1.0 -5.00% income on investments and collection of employer and employee contributions. These income 0.0 -10.00% sources (Additions to Retirement Plan Net Assets) total $1.5 billion for the fiscal year ended June 30, 2007, an increase of $178 million over the prior year. Net Assets • Employer and Employee contributions were Investment Returns $365 million in Fiscal Year 2007, an increase of $21 million over the prior year. Combined SDCERA’S ADDITIONS (MILLIONS OF DOLLARS) FOR THE FISCAL YEAR ENDED JUNE 30, 2007 contribution rates of 24.69% in Fiscal Year 2007 compared to 23.08% in Fiscal Year 2006 resulted in a $30 million increase in 900 800 3 required contributions for the county. This 700 600 increase was offset by a $16 million reduction 500 1 in additional contributions from the county. 400 2 Employee offsets paid by the county 300 200 increased $4 million, while employee 100 contributions increased another $3 million. 0 1998 1999 2000 2001 2002 • Net investment income equaled $1.1 billion in fiscal year 2007, an increase of $157 million, over the prior year. This income was primarily net appreciation in the fair value of investments of $965 million and $241 million in interest and dividends, offset by investment expenses of $87 million. 2003 2004 2005 2006 2007 (100) (200) 1. Retirement Contributions: $365 million 2. Interest, Dividends and Securities Lending Income: $241 million 3. Net Appreciation in Fair Value of Investments: $965 million 4. Investment Expense: ($87 million) 350 4 2 1998 1999 2000 2001 2002 2003 2004 18 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2007 300 250
Net Assets Investment Returns M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S / F I N A N C I A L 3 900 3 900 800 800 700 700 3 900 600 600 800 500 500 DEDUCTIONS FROM 700 RETIREMENT 1 400 1 400 PLAN NET ASSETS 600 2 The primary uses of SDCERA 300 2 assets 300 are for the payment of benefits to retirees and their 500 200 beneficiaries, the refund of contributions 200 1 400 100 to former members and the cost of administering the 100 2 plan. Deductions from 300 retirement 0 plan 0 net assets for fiscal year ended June 30, 2007 totaled 200 $371 million, an increase of $37 (100) (100) 100 million or 11% over 2006. 4 (200) 4 (200) 0 • Retirement and health (100) benefits represent $35 million of the year-over-year change reflecting 4 a net increase in the (200) number of retirements and average benefit paid coupled with an increase in the number of health benefit allowances. SDCERA’S DEDUCTIONS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 (MILLIONS OF DOLLARS) SDCERA’S DEDUCTIONS 350 350 (MILLIONS OF DOLLARS) 300 300 350 250 250 2007 300 200 2006 200 250 150 150 200 100 100 150 50 50 100 0 0 50 Pension Pension Health Health Administrative Administrative $10.3 $10.3 (2%) (2%) Administrative Administrative Expenses Expenses Benefits Benefits Benefits Benefits Expenses Expenses 0 $322.6 $322.6 (87%) (87%) Pension Pension Benefits Benefits Pension Health Administrative Refunds $10.3 (2%) Administrative $35.3 $35.3 (10%) (10%) Health Expenses Health Benefits Benefits Benefits Benefits Expenses $322.6 (87%) $2.6 Pension $2.6 (1%) (1%) Refunds Benefits Refunds $35.3 (10%) Health Benefits $2.6 (1%) SUMMARY Refunds For the third consecutive year the plan’s net assets experienced solid growth and are currently at $8.4 billion. Positive investment performance and additional contributions have delivered $1.5 billion in assets funding $0.4 billion in benefits and adding $1.1 billion in pension assets. The current financial position results from a diversified investment program that prudently manages risk to maximize returns, an effective system of cost control and strategic planning. 2007 2007 2006 2006 Refunds Refunds REQUESTS FOR FINANCIAL INFORMATION This financial report is designed to provide the Retirement Board, our membership, taxpayers, investment managers and creditors with a general overview of SDCERA finances and to demonstrate SDCERA’s accountability for the funds under its stewardship. Please address any questions about this report or requests for additional financial information to: SDCERA, 2275 Rio Bonito Way, Suite 200, San Diego, California 92108 Mark Mimnaugh, Chief Operating Officer November 30, 2007 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2007 19
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